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SCARLATTI'S APPROACH TO WORKFORCVE MODELLING

BY DENNY HIOE

 

ABSTRACT
An acronym for Industry Characterisation of Workforce Model, Inchworm is a simulation-based tool that rigorously estimates the demand for people and skills in different industries and the required supply response to match demand.


WHAT INCHWORM CAN BE USED FOR
Inchworm is most useful for education / training providers, industry bodies and government agencies, among others. These organisations can benefit from the application of Inchworm to set targets, prioritise policies, develop investment plans, and provide thought-leadership to address issues involving workforce capabilities.

 

POINTS OF DIFFERENCE BETWEEN INCHWORM AND OTHER WORKFORCE MODELLING TOOL

1. Inchworm differentiates between supply of (and demand for) skills and people

Most occupations need / accept a mixture of skilled and unskilled workers. Understanding this is necessary to robustly evaluate the shortages and excesses in skills and labour. This is especially so for industries in which upskilling of the workforce is common (see below). Other modelling tools usually work in ‘labour’ units, without recognising the mixture of skills in a given occupation.

 

2. Inchworm models different types of demand

Demand for skill and labour is typically generated from three sources:

  • Growth (people and skills);
  • Replacement (people and skills); and
  • Upskilling (skills).

Most workforce models focus on the first source of demand, growth, and overlook the importance of the other two sources. A robust first principle analysis shows that these can, in reality, have a first-order effect on the total demand. Ignoring this effect can lead to an erroneous forecast of demand numbers.
As previously stated, demand generated from upskilling necessitates a distinction between demand for people and demand for skills. Unlike growth and replacement, upskilling does not introduce new skilled people into the workforce. Consequently, the supply of skills from upskilling will not meet demand for replacement and growth of people.

 

HOW INCHWORM WORKS 

The workforce supply and demand system in Inchworm is modelled as a stock and flow system and is simulated using an agent-based approach. Each worker in the real workforce is modelled as a virtual worker with attributes such as age, tenure, skills, etc., that are updated over time. These attributes are calibrated with publicly available data (which will include Statistics New Zealand’s Integrated Data Infrastructure). Events such as migration, retirement and training occur depending on the attributes of each of these virtual workers. By taking this approach, Inchworm is capable of simulating complex relationships between factors that drive demand generation and the supply response.

 

EXAMPLE OUTPUT FROM INCHWORM 

Inchworm was used by DairyNZ to analyse how the mix of skills in the dairy industry will change over time in response to a forecast supply of training. The following figures show how skills will improve over time as the volume of training increases (different colours illustrate different skill levels).

 

Inchworm output